U.K., Libya Unveil Energy, Arms Deals on Blair Trip

British Prime Minister Tony Blair hailed what he called Britain's transformed relations with once-isolated Libya after meeting Muammar Gaddafi on Tuesday and the two countries unveiled major energy and defense deals.

Libyan Prime Minister al-Baghdadi al-Mahmoudi said Libya would buy British missiles and air defense systems, in what would be the largest U.K. defense sale to the former outcast state since an international arms embargo on Tripoli ended in 2004.

British oil giant BP signed a major natural gas exploration agreement with Libya's state-owned National Oil Corporation with an initial exploration commitment of at least $900 million.

Blair, making the second trip of his premiership to Libya, arrived in Gaddafi's home town of Sirte and was driven for 20 minutes to a tent in the desert to meet the veteran ruler, in power since he overthrew the monarchy in a 1969 coup.

"The relationship between Libya and Britain has completely transformed in the past three years," Blair, due to step down next month, told reporters afterwards.

Blair first visited Libya in 2004, sealing Tripoli's return to the international fold after it abandoned efforts to acquire nuclear weapons and agreed to pay damages for a 1988 airliner bombing over Lockerbie, Scotland, that killed 270 people.

Blair hailed the strong cooperation on fighting terrorism and on defense between Britain and the OPEC member state. "The commercial relationship, as you can see by this huge investment deal today, is simply going now from strength to strength," he said.

Biggest Exploration Commitment

He said the defense deal would "bring the two countries ever closer together in cooperation in counter-terrorism, defense and of course trade and commerce."

BP said the agreement was its single biggest exploration commitment and marked its return to Libya more than 30 years after its assets there were nationalized by Gaddafi in 1971.

On Tuesday, Blair met representatives of families of HIV-infected children at the center of a case in which five Bulgarian nurses and a Palestinian doctor have been sentenced to death by a Libyan court. The six say they are innocent.

The Libya visit marks the start of Blain's last tour of Africa before he quits as prime minister on June 27 after a decade in power, handing over to Finance Minister Gordon Brown.

Blair will also travel to Sierra Leone and South Africa in preparation for a summit of the Group of Eight major industrial countries in Germany next week, when Africa and climate change will top the agenda, and to push for a global free trade deal.

Gaddafi said in March that Libya had not been properly compensated for renouncing nuclear weapons and that as a result nations like Iran and North Korea would not follow his lead.

Blair said in answer to question that Libya's rapprochement with the West had lessons for Iran. "In respect of Iran I've got no doubt at all that the situation is the same, in this sense, that the potential for partnership is always there provided the actions are the actions of partners," he said.

The West and Tehran are at odds over Iran's nuclear program, which the West suspects is aimed at making atom bombs. The Islamic Republic denies seeking nuclear weapons and says its program is aimed purely at generating electricity.

Mahmoudi added that Britain and Libya planned to sign an agreement within the next year providing for what he called exchanges of prisoners. He did not elaborate.